News Category: Matter Reporting

The Karnataka High Court has stayed an INR 335 crore Show Cause Notice (SCN) issued to GE India (Petitioner) in challenge to the constitutional validity of the 70:30 deemed valuation mechanism prescribed under Notification No. 24/2018-Central Tax (Rate), dated December 12, 2018. The notification mandates a 70:30 ratio deemed fiction for the supply of goods and services by adding an Explanation to Serial No. 234 of Notification No. 1/2017-Central Tax (Rate), dated June 28, 2017.

The Petitioner has challenged Notification No. 24/2018, along with the corresponding notification issued by the Karnataka Government, as ultra vires Section 15 of the CGST Act and violative of Articles 14, 19(1)(g), and 265 of the Constitution of India.

GE India, engaged in the supply of windmills, is facing an SCN with an aggregate demand of INR 335 crore across multiple states.

The matter is before Justice S.R. Krishna Kumar.

Advocates Tushar Jarwal, Rahul Sateeja, and Vikrant A. Maheshwari are appearing for the Petitioner.

Andhra Pradesh High Court granted an interim stay to GE T&D (Petitioner) on show cause notice issued by the audit officer. The Petitioner challenged the assignment of function of ‘proper officer’ to audit officer by the circulars issued by the Central Board of Indirect Taxes and Customs (CBIC). Thus, the Petitioner has challenged the three circulars issued by CBIC i.e. Circular No. 3/3/2017-GST dated July 05, 2017, Circular No. 31/05/2018-GST dated February 09, 2018, and Circular No. 169/01/2022-GST dated March 12, 2022.

The challenge is based on the ground that the Circulars are ultra vires the CGST Act and violative of Articles 14, 19(1)(g) and 265 of the Constitution of India. The High Court was pleased to grant interim relief until October 18, 2024, and put the matter for hearing on October 01, 2024.

The matter is before the Division Bench of Justice R. Raghunandan Rao and Justice Harinath N.

Advocates Tushar Jarwal, Rahul Sateeja, and Vikrant A. Maheshwari are appearing for the Petitioner.

OYO Apartments Investments LLP v Desire Infrabuild Pvt. Ltd. | O.M.P (COMM.) NO. 343 OF 2024). DHC

Delhi High Court: Grants stay of the effect and operation of the Impugned Award dated April 6, 2024, without seeking deposit of monies by Petitioner, as required under Section 36(3) of the Arbitration and Conciliation Act, 1996 (the “Act”), and Order XLI Rule 5(3) of the Code of Civil Procedure, 1908, on the prima facie view that the award was rendered after the mandate of the learned Arbitrator had already expired. The award was challenged on the grounds inter alia that the Arbitral Award had been passed after the mandate of the arbitrator had expired.

In the arbitration proceedings between the parties, the pleadings stood completed on July 15, 2022, as per Section 23(4) of the Arbitration and Conciliation Act, 1996, since the Petitioner filed its Statement of Defence on July 15, 2022. As per Section 29A of the Act, the Arbitrator has a period of 12 months from the date of completion of pleadings to pass the award, which was set to expire on July 14, 2023. However, the parties agreed to extend the mandate of the learned Tribunal by an additional 6 months, as permitted under Section 29A(3) of the Act, thereby extending the mandate until January 14, 2024. Despite the Arbitrator’s mandate expiring on January 15, 2024, rendering the Tribunal functus officio, the impugned award was passed on April 06, 2024.

Notably, no application was filed before the Hon’ble Delhi High Court to seek an extension of the mandate of the Arbitrator.

The Hon’ble Delhi High Court, on the prima facie view that the Arbitral Tribunal was functus officio on the date the Impugned Award was passed, was pleased to stay the operation and effect of the impugned award.

Advocates for the Petitioner: Senior Advocate Gopal Jain, along with Advocates Chaitanya Kaushik, Junaid Aamir, and Avinash Singh.

In a significant respite to Vedanta Limited (“Vedanta”), the Securities Appellate Tribunal has allowed the Appeal filed by Vedanta against the order passed by the Securities and Exchange Board of India (“SEBI”) and has set aside the penalty of Rs 5.25 crores imposed upon Vedanta and Rs 15 lakhs on three officers of the Company.

SEBI had alleged that the public announcement by Cairn India Limited (“Cairn”) (now merged with Vedanta) for buying back its shares was a misleading announcement designed to influence the decision of the investors and induce them to trade in the shares of Cairn which was reflected in the increased trading volume after the buyback announcement. On that basis, SEBI alleged that Cairn by making the public announcement of buyback without any intent to fulfil it, had acted fraudulently and violated the provisions of the SEBI (PFUTP) Regulations and the SEBI Buyback Regulations.

Cairn had made the Public announcement on January 14, 2014 for buyback of its 17,08,95,522 equity shares of ₹10/- each at a maximum price of ₹335/- per share for a maximum amount of ₹5,725 crores in accordance with SEBI Buyback Regulations. The buyback offer was scheduled to open on January 23, 2014 and close on July 22, 2014.

Cairn was able to buy back 3.67 crores shares, after spending a sum of Rs 1,225 crores, which represented 21.48% of the total shares earmarked for the buyback as against the requirement of buying back a minimum of 50% of the shares earmarked for the buyback.

Vedanta argued that Cairn made all attempts to complete the buyback and had placed purchase orders on the stock exchanges almost on the daily basis but the same could not be completed as market price of the shares remained higher than maximum buyback price during the majority of the 6 months buy back period, which was beyond control of Cairn.

Vedanta relied on SEBI’s own investigation report wherein SEBI had come to the conclusion that no major impact on price and volume was observed on the basis of the corporate announcement made by Cairn and argued that thus allegation of fraud could not have been made against Cairn.

Mr. Somasekhar Sundaresan, Advocate instructed by DMD Advocates, led by Mr. Pawan Sharma, Advocate and Mr. Rishabh Sharma, Advocate appeared for Vedanta Limited.

Mr. Shiraz R, Senior Advocate instructed by a team led by Mr. Manish Chhangani, Advocate appeared for Securities and Exchange Board of India.

The matter has also been reported by:

TaxGuru – https://taxguru.in/sebi/breather-vedantas-cairn-alleged-buyback-fraud-sat-reverses-sebis-order.html

The Division Bench of the Hon’ble Delhi High Court has recently, by way of a Judgment delivered on 10 August 2023, held that a batch of Writ Petitions seeking relief against a private Bank in cases where the Builder/Developer has failed to deliver possession, are not maintainable.

The Hon’ble Court held that since the rights claimed by the Petitioners flowed from private contracts and each of the cases also involved complex and disputed questions of fact, the High Court is not the appropriate forum to adjudicate the disputes. Additionally, it was observed that the Petitioners were not without recourse, as they had other avenues to pursue their grievances before various fora.

Our Litigation Partner, Kuber Dewan, along with Neeharika Aggarwal, Counsel and Kaustubh Srivastava, Associate, appeared on behalf of the Respondent Bank.

The Hon’ble Delhi High Court has recently, by way of a judgment delivered on 14 March 2023, held that Writ Petitions filed seeking relief against Banks and other Financial Institutions in cases where the Builder/Developer has failed to deliver possession, are not entertainable.

While dismissing the Writ Petitions, the Learned Single Judge made a distinction between “maintainability” and “entertainability” of the writ petitions and observed that these two were distinct legal concepts.

Reiterating the well settled principle that rights emanating from private contracts cannot be enforced by way of a Writ Petition, the Court held that since the rights claimed by the Petitioners flowed from private contracts and each of the cases also involved complex and disputed question of facts, the Court would not entertain the Petitions.

It was also observed that not only did the rights of the Petitioners flow from private contracts, but also, the parties were not remediless, as alternative remedies before various fora are available to the Petitioners to address such grievances, and any interference by the Writ Court would amount to usurpation of powers vested with the respective fora.

Therefore, in view of the availability of alternative remedies available to the Petitioners, the Hon’ble Delhi High Court did not find it appropriate to entertain these Writ Petitions.

Our Litigation Partner, Kuber Dewan, along with Neeharika Aggarwal, Principal Associate; Trisha Raychaudhuri, Senior Associate; and Kaustubh Srivastava, Associate, represented one of the Respondent Banks.

HC: 9 years delay ‘woeful’ & ‘inexcusable’; Held Sec.271C penalty show cause notice time barred

In a significant judgment, Delhi High Court held that a show cause notice issued by the Revenue under Section 271C, for imposing penalty, was ‘woefully’ delayed, thus, quashed the show cause notice. The Court further stated that the Revenue’s delay in issuing show cause notice i.e., almost 9 years from end of relevant AY, was inexcusable and remarked that, “even if we were to take an indulgent view of the matter, and give leeway to the respondent/revenue, that the period for commencement of limitation prescribed in terms of the second limb of clause (c) of sub-section (1) of Section 275 of the Act would commence either from 2013 or 2014, there is a period of unexplained substantial delay, as the SCN, concededly, was issued only on 09.11.2017.” The ruling was delivered by the Division Bench of the Delhi High Court.

Our Partner Sachit Jolly, along with Rohit Garg (Associate Partner), Soumya Singh (Senior Associate), Disha Jham (Senior Associate) and Sohum Dua (Associate) appeared for the Assessee.

The National Company Law Appellate Tribunal has recently set aside the decision of the Competition Commission of India in the 2013 tyre cartel matter (where the CCI imposed a penalty of around INR 18 billion on domestic tyre companies). Not only has the Appellate Tribunal directed the CCI to re-examine its errors, but also to review the penalty with a view to save the domestic tyre industry which has been under pressure from global tyre companies. Interestingly, the Tribunal observed that the object of the Competition Act is also to keep in view the economic development of the country by promoting the domestic industry. Violators may be penalised but with a view to encourage reform ‘instead of virtually putting the organisation on weak health’.

Our Competition Partner, Vivek Agarwal, led the matter for a leading tyre company.

Read more at https://lnkd.in/dgehdaUv

Our Partner Sachit Jolly was appointed as Amicus Curiae to assist the Delhi High Court in a matter dealing with post-search assessments. Agreeing with the submissions made by Mr. Jolly, the Court held that the ratio of Kabul Chawla decision was not diluted by the Dayawanti ruling. The High Court also appreciated the assistance rendered by Mr. Jolly.

Delhi HC dismisses Revenue’s appeal on validity of post-search assessments, made in absence of incriminating material, as devoid of substantial questions of law. Revenue relied upon coordinate bench ruling in Dayawanti to submit that a statement recorded under Section 132(4) during the search operation can be treated as incriminating material based on which an addition can be sustained. Amicus Curiae submitted that there were no abated assessments, thus, no addition could be made without any incriminating material and there was, in fact, neither any fresh information/material unearthed during the search operation nor any statement under Section 132(4) was recorded which could be classified as incriminating material. HC observes that coordinate bench ruling in Dayawanti relied upon by the Revenue was in peculiar facts and does not dilute Kabul Chawla’s ratio. With regard to Punjab & Haryana HC and SC rulings in Assessee’s case relied upon by the Revenue, HC holds that SC directions were given after Revenue conducted search; thus, they cannot form incriminating material found during the search.

The High Court of Punjab & Haryana: No change-in-law relating to Intermediary taxation; Genpact BPO not an “Intermediary”; Applies ‘consistency principle’. The Hon’ble Court restored the order-in-original granting refund in favour of the assessee and directed that the benefit of this order shall enure to the assessee for grant of subsequent refunds as well.

Our Partner Sachit Jolly appeared for the Assessee.